In a challenging environment, GEA again delivered a robust performance in the third quarter of 2023.
EBITDA before restructuring expenses rose by 4.2% to EUR207-million. The corresponding EBITDA margin improved by 0.6 percentage points to 15.3 percent. Return on capital employed (ROCE) climbed from 30.6% to 33.9%. Free cash flow increased significantly to EUR187-million.
- Order intake down 9.1% to EUR1.247-million (Q3 2022: EUR1.372-million), particularly due to negative currency effects of EUR96-million; slight organic decline of 1.7%.
- Organic revenue growth of 6.9%; reported revenue stable at EUR1.351-million (Q3 2022: EUR1.354-million).
- EBITDA before restructuring expenses up 4.2% to EUR207-million (Q3 2022: EUR199-million).
- EBITDA margin before restructuring expenses increased by a further 0.6 percentage points to 15.3% (Q3 2022: 14.7%).
- ROCE up markedly to 33.9% (Q3 2022: 30.6%).
- Free cash flow significantly increased by 81% to EUR187-million (Q3 2022: EUR103-million).
- Net working capital as a percentage of revenue in the last 12 months, improved to 8.3% (Q3 2022: 8.9%); slight decline in net liquidity to EUR233-million (Q3 2022: EUR235-million).
- Outlook for 2023 fiscal year confirmed.
“We are currently navigating an environment dominated by rising interest rates, negative currency trends and geopolitical uncertainty. Notwithstanding these negative influences, we have demonstrated our economic resilience,” says CEO Stefan Klebert.
“The growth in the EBITDA margin, which has reached more than 15 percent for the first time in six years, is particularly positive. We also significantly increased our free cash flow,” says Klebert.
Third-quarter EBITDA before restructuring expenses rose 4.2% to EUR207.0-million (Q3 2022: EUR198.7-million). The corresponding margin improved by 0.6 percentage points to 15.3% (Q3 2022: 14.7%). The higher share of the service business contributed significantly to this positive development.
Profit for the period climbed by 12.9% to EUR120.8-million (Q3 2022: EUR107.0-million). Earnings per share increased accordingly from EUR0.61 to EUR0.70, with earnings per share before restructuring expenses up from EUR0.66 to EUR0.72.
Alongside improved earnings, cash flow from operating activities rose clearly in the third quarter to EUR235.7-million (Q3 2022: EUR146.5-million), especially due to higher advance payments and a decline in trade payables. With only a slight change in investing activities, free cash flow rose sharply by 81% to EUR186.9-million (Q3 2022: EUR103.3-million). Around 95 percent of EBITDA was thus converted into free cash flow (before restructuring expenses).
Net liquidity, including lease liabilities, amounted to 232.9 Mio. EUR as at the reporting date of 30 September 2023 (September 30, 2022: 235.1 Mio. EUR). Net working capital as a percentage of revenue improved to 8.3 percent compared with 8.9% in the prior-year quarter. Return on capital employed (ROCE) increased noticeably from 30.6% to 33.9%.
“The strong cash generation this quarter is also particularly notable. We managed to convert virtually all of our EBITDA into free cash flow. The growth in ROCE is also impressive, reaching the highest level ever achieved by GEA,” says Bernd Brinker, CFO.
GEA has confirmed its forecast for fiscal year 2023, which was raised in May 2023. The company still expects revenue to grow on an organic basis by more than 8%. EBITDA before restructuring expenses at constant exchange rates, is anticipated to be at the upper end of a range between EUR730-million and EUR790-million. At the same time, GEA aims improve the EBITDA margin before restructuring expenses to at least 14%. GEA expects ROCE to be more than 32%, at constant exchange rates.
GEA website https://www.gea.com/en/news/corporate/2023/ebitda-margin-improved-strong-free-cash-flow-in-third-quarter.jsp